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The leadership of the European Central Bank is set to undergo a major shake-up, and the competition for the next president has begun!
The European Central Bank is about to launch a large-scale reorganization of its top leadership team. This personnel change will ultimately determine who will succeed the current president, Christine Lagarde.
On November 10th, according to media reports, by the end of 2027, four of the six seats on the Executive Board of the European Central Bank will be vacant, and a battle for the top monetary policy position in the eurozone has already begun behind the scenes.
It is reported that the term of Deputy Governor Luis de Guindos will expire first in May next year, and the European Central Bank is about to ask Brussels to start the formal succession process. The report quoted three people familiar with the matter as saying that eurozone finance ministers will start discussing the matter this week.
Subsequently, the terms of Lagarde, Chief Economist Philip Lane and Isabel Schnabel will also end one after another in 2027, triggering fierce competition among eurozone countries for the most powerful monetary policy position in the region, and the behind-the-scenes struggle for the position of the president of the European Central Bank has already begun.
Analysts point out that the nationality and monetary policy stance of the deputy governor candidate will have a significant impact on the choice of Lagarde's successor, which is related to the complex power balance among the eurozone's upcoming expansion to 21 member states.
Three main contenders for the position of central bank governor have emerged
Regarding the candidate for the deputy governor position, the report indicates that Finland has decided to nominate its central bank governor Olli Rehn for the position. He is an economist and a former EU commissioner.
Rehn is one of the more dovish voices on the ECB's Governing Council. He has warned of the risk that inflation may fall below the central bank's 2% target. It is worth noting that this competition for the appointment coincides with the expiration of Federal Reserve Chair Jay Powell's term in May.
In addition, the report quoted a person familiar with the matter as saying that the Croatian government is also preparing to nominate Boris Vujecic, the governor of its central bank.
The behind-the-scenes battle for the position of the president of the European Central Bank has already begun.
It is reported that informed sources disclosed that Klaas Knot, the former governor of the Dutch Central bank, and Joachim Nagel, the governor of the German central bank, are the two main contenders to succeed Lagarde.
Pablo Hernandez de Cos, the former governor of the Bank of Spain and current managing director of the Bank for International Settlements, a respected former academic economist, was described by a person familiar with the matter as the third candidate who "meets all the requirements".
Nagel has begun lobbying Berlin to support him in becoming the next president of the European Central Bank.
The report pointed out that informed sources disclosed that he has recently delivered a series of speeches and interviews, including in Greece, Spain, India and the United States, covering topics such as "Adapting Europe to its new global role". Although Germany is the largest member state of the Eurozone, it has never served as the president of the European Central Bank.
Lars-Hendrik Roller, the chief economic adviser to former German Chancellor Angela Merkel, said recently, "I think it's time (for the Germans to lead the ECB), but it's complicated."
Like Germany, Spain has never served as the president of the European Central Bank and is currently the only large eurozone economy that has maintained significant growth. After Guindos leaves office, Spain will also have no representative in the executive committee. Hernandez de Cos has taught at Spanish business schools and Carlos III University of Madrid. He has academic and institutional experience and is known for his pragmatic voice in the management committee.
But the position at the European Central Bank is often part of a broader political deal among eurozone member states. A senior figure from the central bank said, "Unfortunately, qualifications are not necessarily the decisive factor."
Complex considerations of power balance
The allocation of seats on the Executive Board of the European Central Bank is a highly complex task. Jens Eisenschmidt, chief European economist at Morgan Stanley and former senior fellow at the European Central Bank, said:
Reflecting the full representation of European member states in the Executive Board of the European Central Bank is an extremely complex task.
It is worth noting that there is an unwritten rule for the selection of the Executive Committee members of the European Central Bank, that is, no country can occupy two Executive Committee seats at the same time, and governments of various countries also seek to maintain a balance between hawkish and dovish positions.
The Eastern European and Baltic countries that joined the Eurozone after 2007 are demanding a say in the executive committee, and Latvia has openly sought a seat.
Gender balance is also one of the considerations. Historically, the Executive Board of the European Central Bank has always been dominated by men. Since 1998, only 19% of the 26 members have been women. A person close to the discussion said, "France and the European Parliament will particularly emphasize gender issues."
It is reported that Agnes Benassy-Quere, the deputy governor of the Bank of France, Christina Papaconstantinou, the deputy governor of the Bank of Greece, Laurence Boone, the chief economist of the OECD, and Helene Rey, a professor at the London Business School, All are regarded by insiders as strong female contenders for seats on the executive committee.
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